Nvidia shares fell roughly 4.3% on Monday, wiping about $192 billion from the company’s market value, after chief executive Jensen Huang admitted to an extramarital affair and the company said it was investigating reports that he had been the “target of a foreign intelligence effort.” The stock dropped as much as 8.8% shortly after the opening bell before recovering some of the losses.
The slide came even as the rest of the market climbed. The S&P 500 rose 2.35%, its best day since April, and the Nasdaq Composite gained 2.7%, its best day since July, as Wall Street rebounded from last week’s sell-off. The Nasdaq had closed in correction on Thursday, down more than 10% from its peak a month earlier, before rallying on Friday and Monday. Nvidia shares are now down 25% since their own peak a month ago and last week they erased their gains for the year.
Nvidia opened the independent inquiry after reports that Huang had a relationship with a woman US intelligence officials suspect of spying for China. “While the Board has no reason to believe that either national security or NVIDIA secrets were compromised, the Board’s inquiry will examine all available information,” the company said in a statement on Sunday. In a separate note to staff, Huang said: “I am committed to protecting NVIDIA and supporting America’s national security.” He also apologised to his wife and children.
President Donald Trump said on Monday evening that the FBI was looking into the matter.
Huang founded Nvidia in 1993, took it public in 1999 and built it into a central pillar of the AI boom. The company pioneered graphics processing units, chips first built for gaming that researchers later turned to AI work. Nvidia supplied a supercomputer to OpenAI in 2016, six years before ChatGPT went public. Its shares are up 1,250% over the past four years and last year it became the first company to pass $5 trillion in market value. It now accounts for roughly 7% of the S&P 500.
Analysts at Citi wrote that the key questions for investors are whether the board’s inquiry uncovers anything more serious that could jeopardise Huang’s role as chief executive, and whether there are regulatory implications that could constrain sales. Dan Ives, partner and senior managing director at Yorkville Ives & Co., wrote that “Jensen is the core DNA of Nvidia” and that he “is not replaceable.” Nigel Green, chief executive at deVere Group, described it as “for now at least, a personal scandal,” adding that “if the probe finds anything more serious, the selloff could deepen, so investors need to weigh these risks carefully.”
Nvidia is expected to report quarterly earnings on 17th November.
